The mortgage meltdown and huge volatility in the stock markets has obviously had a significant impact on the sale of homes. The average price per sq. ft. for homes sold in the first quarter 2009 compared to the first quarter 2008, has fallen much less in the South Bay beach cities, however, than in most markets in Southern California. We are just now getting some news reports indicating that prices are beginning to stabalize in Southern California.
|Location||2009 1st Qtr. Sales||
2009 1st Qtr. Sales
|%Change 1st Qtr. 2008
|% Change 1st Qtr. 2008
|Sales Price Per Sq. Ft.||# of Houses||Sales Price Per Sq. Ft.||Sales Volume|| Days on Market
| Months Inventory
|Palos Verdes Estates||$560||18||( 14% )||29%||66||16|
|RPV and RHE||425||39||( 16%)||( 30%)||81||11|
|Manhattan Beach/Hermosa||626||51||( 20% )||( 24% )||96||11|
|Redondo Beach||432||37||( 10% )||( 2% )||73||4|
|Torrance||378||81||( 13% )||( 12% )||62||3|
|San Pedro||325||48||( 18% )||23%||100||6|
There were no sales in Rolling Hills during the last two quarters. Properties, on average, in the South Bay are selling for approx. 95% of list price.
For most of the last two decades, Los Angeles County has averaged an 8 month inventory, therefore for most of the South Bay; the number of months of inventory is not unusually high. The number of months of inventory of homes in Redondo Beach, Torrance and San Pedro has shrunk significantly in the last 2 quarters. This is indicative of the fact that the lower priced homes tend to be selling faster. Homes in the lower end of the price range in the higher priced market of the Palos Verdes Peninsula and Manhattan Beach are also selling faster than the higher priced homes. The sale of higher priced homes has been severely impacted by the lack of funding available for jumbo mortgages. .
Communities where homes were primarily financed with no down payment variable rate loans, have seen the most loan defaults and resulting price declines, such as San Bernardino, where median home prices are down 40% compared to a year ago.
WHAT ARE MORE IMPORTANT LOWER PRICES OR LOWER INTEREST RATES? Hypothetically, if a homes price fell an additional 10% from $500,000 to $450,000, but interest rates went up 1% point, your mortgage payment would be the same. Any advantage gained by waiting for prices to fall can easily be offset by a rise in interest rates. Inflationary pressures continue to increase, due to increases in gas and food prices. With increased inflation, come higher long term interest rates.
How can you get prepared to buy or sell in this market?
Hire a Realtor with strong internet presence both locally and across the country. Dont miss this very important sales tool. Most buyers begin their search on the internet today.
Maximize your homes best attributes for an optimal selling price and fewer days on the market. Use my website which is filled with ideas to get your home ready, or it can be professionally staged. Email or call me with questions. If you are thinking of selling your home, now may be the best time in the foreseeable future to list your property for sale, while interest rates are low. Qualified buyers are definitely out there and activity has picked up substantially since mid September. In 2009, with a new administration, new tax reform measures may be passed, the market may continue to cool and interest rates may rise.
BUYERS AND SELLERS TAKE HEART! There is financing available for well qualified buyers due to the Federal Reserves aggressive action in purchasing Fannie Mae and Freddie Mac securities. Many buyers may have been severely affected by the drop in the stock market which may impact the amount of money they may have available for a down payment. There are new guidelines for Fannie Mae and Freddie Mac loans, and 3.5% down payment loans are available with tight restrictions. Recent passage of the Financing Bail-out bill will help provide additional capital in the market for new mortgage loans, but this will take time to implement. Interest rates have also fallen significantly.
BUYERS with good credit, an adequate down payment and 2 years or more employment history will qualify for Full Documentation loans. There are no Stated Loans ( no documentation) offered now. More programs will become available. If the property will be your home, not a speculative investment, you should be buying for the long term. Todays market gives buyers and sellers the opportunity to negotiate a reasonable deal for both parties.
Interest rates on jumbo 30 year fixed rate mortgages (loans in excess of $625.500) have decreased substantially over the last several quarters to an average rate (as of 4/15/09/) of approx. 6.5% but still are significantly higher than 30 year fixed rate conforming loans (loans of less than $417,000) which are at approx. 4.75%. Rates for loans between $417,000 and $625,500 are about one-quarter of a percentage point higher. Conforming loans generally require a 10% down payment (less for FHA loans)
This large spread between jumbo loans and conforming loans is amazing considering that prior to the mortgage loan melt down, spreads between conforming and jumbo loans were only approx. two-tenths of a percentage point.
Jumbo Loans – Because of this high interest rate for 30 year jumbo loans, most jumbo loans are being done for fixed rates of only 5 to 7 years, in the range of 5.5% (with 1 point), with a 25% to 30% down payment.
Thanks for reading this. We hope it helps your decision making. Call us for more in depth help for your property.